Compared to the EU average of 34.90 euros, companies in Germany pay 29% more per hour of work. This places Germany among the countries with the highest labor costs in Europe. Only Luxembourg (56.80 euros), Denmark (51.70 euros), the Netherlands (47.90 euros) and Austria (46.30 euros) had higher labor costs in 2025.
Labor costs in Germany, which are already high compared to other European countries, increased significantly last year.
An hour of work in the manufacturing and services sectors cost an average of 45 euros, according to the Federal Statistical Office. Compared to a year earlier, labor costs rose by 3.6 percent, slightly less than the EU average of 4.1 percent, Scan writes, reports albinfo.ch.
Labor costs consist of gross wages and additional wage costs, such as employer social security contributions and training costs. Gross wages include pay for hours worked, bonuses, employee savings plans, and compensation for days not worked, such as vacation days.
Compared to the EU average of 34.90 euros, companies in Germany pay 29% more per hour of work. This places Germany among the countries with the highest labor costs in Europe. Only Luxembourg (56.80 euros), Denmark (51.70 euros), the Netherlands (47.90 euros) and Austria (46.30 euros) had higher labor costs in 2025.
The largest increase in labor costs in 2025 was recorded in Bulgaria, by 13.1 percent, followed by Croatia by 11.6 percent and Poland by 10.5 percent. Labor costs increased less in France, by 2 percent, in Denmark by 3 percent and in Italy by 3.2 percent. In Malta, labor costs even recorded a slight decrease.
In the medium term, the cost of an hour of work in Germany has increased by 22.3 percent since 2020, the Federal Statistical Office reported. The largest increase, at 30 percent, was recorded in the hotel and catering sector. However, the gap with the EU average has changed very little.
Due to the global crisis, companies in Germany are planning to cut more jobs, according to the ifo Institute. The labor market indicator has worsened in the manufacturing sector, as well as in wholesale and retail trade.